Angelo Ltd produces a range of tools used in the construction industry. The costing system indicates that their cheapest product, the Grabber, has a standard direct cost per unit of £19.50. This consists of 3 kg of metal, costing £5 per kg and 30 minutes of direct labour charged at £9 per hour. In the period just ended, output of 950 units had been planned although in the end 1,000 units were actually produced and costs were incurred as follows: Quantity of metal purchased and consumed 3,200 kg Total cost of metal £15,520 Number of direct labour hours worked and paid 450 hours Total direct labour bill £4,140 Section B - ALL THREE questions are compulsory and MUST be attemptedQ1.Angelo Ltd produces a range of tools used in the construction industry. The costingsystem indicates that their cheapest product, the Grabber, has a standard direct costper unit of £19.50. This consists of 3 kg of metal, costing £5 per kg and 30 minutesof direct labour charged at £9 per hour. In the period just ended, output of 950 unitshad been planned although in the end 1,000 units were actually produced and costswere incurred as follows:Quantity of metal purchased and consumedTotal cost of metalNumber of direct labour hours worked and paidTotal direct labour bill3,200 kg£15,520450 hours£4,140Required:a. Calculate materials price, materials usage, labour efficiency and labour ratevariances.17

Formulas for Material Variance 1) Material Price Variance (MPV) MPV = (SP - AP) x AQ. Where, SP =…

Answered: Angelo Ltd produces a range of tools…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Angelo Ltd produces a range of tools used in the construction industry. The costing system indicates that their cheapest product, the Grabber, has a standard direct cost per unit of £19.50. This consists of 3 kg of metal, costing £5 per kg and 30 minutes of direct labour charged at £9 per hour. In the period just ended, output of 950 units had been planned although in the end 1,000 units were actually produced and costs were incurred as follows: Quantity of metal purchased and consumed 3,200 kg Total cost of metal £15,520 Number of direct labour hours worked and paid 450 hours Total direct labour bill £4,140

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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